Treatment of localized osteosarcoma with amputation alone has historically resulted in long-term relapse-free survival of approximately 20%, although recently relapse-free survival of greater than 40% has been reported in surgically-treated patients. Although several chemotherapeutic agents have been found to cause tumor stabilization or regression in patients with overt tumor, their benefit in the adjuvant setting following surgical removal of all identifiable tumor is much debated. The objective of this multi-institutional study is to evaluate the efficacy of adjuvant chemotherapy using the currently available front-line drugs in children with localized extremity osteosarcoma. Following either amputation or limb salvage procedure, patients are randomized to receive either a 43-week course of chemotherapy using bleomycin/actinomycin D/cyclophosphamide, high-dose methotrexate, adriamycin and cis-platinum (regimen 1), or no immediate chemotherapy (regimen 2). Patients being observed on regimen 2 will receive chemotherapy only in the event of overt tumor recurrence, following attempt at surgical resection of all recurrent tumor. Since May 1982, 36 eligible patients have been randomized on this study (16 from NCI), 18 to the immediate chemotherapy arm and 18 to the observation arm. An additional 77 patients refused randomization of whom 59 elected adjuvant chemotherapy and 18 elected observation alone. Analyzing the randomized group by assigned arm (4 patients refused the random arm assigned), there is a statistically significant diference in time to first relapse favoring the immediate chemotherapy group (p=0.0013, 2-sided log rank test), the 2 year actuarial relapse-free survival being 18% for the observation arm and 56% for the chemotherapy arm. Analysis of the non-randomized patients shows similar results. As yet there is no survival difference between the two arms. It is concluded that the natural history of localized, high-grade osteosarcoma of the extremity has not changed, since less than 20% of such patients treated with surgery alone will become long-term, relapse-free survivors. The administration of adjuvant chemotherapy has a significantly favorable impact on relapse-free survival.